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12945 Japan - Agreement Relating to and Amending the Civil Air Transport Agreement of August 11, 1952, as Amended


   
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TREATIES AND OTHER INTERNATIONAL ACTS SERIES 12945


AVIATION

Transport Services

 

 

Agreement Between the
UNITED STATES OF AMERICA
and JAPAN


Relating to and Amending
the Agreement of August 11, 1952,
as Amended

Effected by Exchange of Notes
Signed at Washington April 20, 1998

with

Memorandum of Understanding

 

 



NOTE BY THE DEPARTMENT OF STATE

Pursuant to Public Law 89—497, approved July 8, 1966
(80 Stat. 271; 1 U.S.C. 113)—

“. . .the Treaties and Other International Acts Series issued
under the authority of the Secretary of State shall be competent
evidence . . . of the treaties, international agreements other than
treaties, and proclamations by the President of such treaties and
international agreements other than treaties, as the case may be,
therein contained, in all the courts of law and equity and of maritime
jurisdiction, and in all the tribunals and public offices of the
United States, and of the several States, without any further proof
or authentication thereof.”

 

JAPAN

Aviation: Transport Services

Agreement relating to and amending the agreement
of August 11, 1952, as amended.
Effected by exchange of notes
Signed at Washington April 20, 1998;
Entered into force April 20, 1998.
With memorandum of understanding.

EMBASSY OF JAPAN
WASHINGTON, D. C.
Translation
Washington, April 20, 1998
Excellency:
I have the honor to refer to the recent consultations on the Civil Air Transport
Agreement between Japan and the United States of America signed at Tokyo, on August 11,
1952, as amended (hereinafter referred to as the "1952 Agreement "). I have further the honor
to propose, on behalf of the Government of Japan, that the provisions contained in the
Memorandum of Understanding signed in Washington, on March 14, 1998, attached hereto,
which were negotiated with a view to ensuring the implementation of the 1952 Agreement in a
manner appropriate to the Japan—U.S. aviation relationship, shall be implemented and that, with
respect to routes, the Schedule to the Agreement be modified accordingly.
If the above proposal is acceptable to the Government of the United States of America,
I have the honor to propose that this Note with its attachment and Your Excellency's Note in
reply shall constitute an agreement between the Government of Japan and the Government of
the United States of America which will enter into force on the date of Your Excellency's reply.
I avail myself of this opportunity to renew to Your Excellency the assurances of my
highest consideration.
Kunihiko Saito
Ambassador Extraordinary
and Plenipotentiary of Japan
to the United States of America
Her Excellency
Madeleine K. Albright
The Secretary of State
of the United States of America
MEMORANDUM OF UNDERSTANDING
The following provisions were negotiated with a view to ensuring the implementation of
the bilateral Civil Air Transport Agreement signed at Tokyo on August 11, 1952 (hereinafter
referred to as the "1952 Agreement") in a manner appropriate to the U.S.-Japan aviation
relationship.
The provisions of this Memorandum of Understanding (hereinafter referred to as the
"1998 MOU"), as incorporated into an agreement to be concluded between the Government of
the United States of America and the Government of Japan by an exchange of diplomatic notes,
will constitute either understandings relating to implementation of the 1952 Agreement, as
amended, or amendments of the Schedule attached to the 1952 Agreement.
Before the entry into force of the agreement, the United States Department of
Transportation and the Ministry of Transport of Japan intend to take necessary measures to
implement the elements of this 1998 MOU, on the basis of comity and reciprocity.
The terms "Party" or "Parties," as used herein, refer to the United States of America
(hereinafter the "United States" or "U.S."), Japan, or both, as appropriate.
Part I. COMBINATION SERVICES
A. INCUMBENT COMBINATION AIRLINES
1. Rights of Incumbents
Two (2) airlines designated by the United States (hereinafter referred to as the "U.S.
incumbent combination airlines")' and two (2) airlines designated by Japan (hereinafter referred
to as the "Japanese incumbent combination airlines")2 (hereinafter collectively referred to as the
"incumbent combination airlines") pursuant to the 1952 Agreement may operate combination
services between any point or points behind the territory of the Party designating the airlines, any
point or points in the territory of the Party designating the airlines, any intermediate point or
points, any point or points in the territory of the other Party, and any point or points beyond the
territory of the other Party, without any limitation on frequency or capacity, and with respect to
traffic composition without limitation except on passenger fifth freedom operations as set out in
subsection 2, below.
1 Subject to the right of the United States, provided for in the 1952 Agreement, to substitute
airlines, the U.S. incumbent combination airlines shall be Northwest Airlines and United Airlines.
2 Subject to the right of Japan, provided for in the 1952 Agreement, to substitute airlines, the
Japanese incumbent combination airlines shall be Japan Airlines and All Nippon Airways.
2. Formulae
Passenger services of incumbent combination airlines on route segments between the
territory of the other Party and third countries, either intermediate to or beyond the territory of
the other Party, (hereinafter referred to as "fifth freedom operations") shall be subject to the
applicable formulae below:
(a) Formulae Applicable to Fifth Freedom Operations of U.S. Airlines
(i) U.S. Airline Operations to and from IATA
Regions TC-1 (the Americas) and TC-3 (Asia)3
The formulae in both provision (a)(i)(1) and provision (a)(i)(2) apply to U.S. incumbent
combination airlines' fifth freedom operations to and from IATA Regions TC-1 (the Americas)
and TC-3 (Asia) (hereinafter referred to as "Asia/Americas"):
(1) The amount of fifth freedom passenger traffic transported by an airline between Japan
and any third country points, either intermediate to or beyond Japan, in Asia/Americas
measured in passenger-miles and aggregated on a system-wide basis over a six (6) month
period,4 does not exceed the amount of total third and fourth freedom passenger traffic
transported by the airline in Asia/Americas measured and aggregated in a similar manner. The
total third and fourth freedom traffic consists of the U.S.-Japan and the U.S.-third country
passenger traffic transported in Asia/Americas by that airline. This relationship between fifth
freedom traffic and the total third and fourth freedom traffic can be expressed as follows:
Pax-miles (BC) < pax-miles (AB) + pax-miles (AC);
and
(2) The amount of third and fourth freedom passenger traffic transported by the airline
between the United States and any third country points, either intermediate to or beyond Japan
in Asia/Americas, measured in passenger miles and aggregated on a system-wide basis over a
six (6) month period, is not less than twenty-five (25) percent of the amount of fifth freedom
passenger traffic transported by that airline between Japan and any third country points, either
intermediate to or beyond Japan in Asia/Americas, similarly measured. This relationship
3 All IATA regions (TC-1: "the Americas," TC-2: "Europe/Africa," and TC-3: "Asia") shall be
considered to be those in effect as of January 1, 1998, as described in the International Air Transport
Association, Passenger Tariff Coordinating Conferences Resolutions Manual--General Information,
issued July 1997.
4 For purposes of all formulae, for newly inaugurated services the six (6) month period would
commence after a reasonable start up period of no less than three (3) months after inauguration of
services.
2
between the U.S.-third country third and fourth freedom traffic and fifth freedom traffic can be
expressed as follows:
Pax-miles (AC) > 25% pax-miles (BC)
(ii) Definitions for U.S. Airline Operations to and from Asia/Americas
For purposes of the above formulae for U.S. airline fifth freedom operations to and from
Asia/Americas:
(1) BC represents the passenger traffic transported by a U.S. airline with an initial origin
or ultimate destination in Japan (B) and an ultimate destination or initial origin in third
countries intermediate to, or beyond, Japan (C);
(2) AB represents the passenger traffic with an initial origin or ultimate destination in the
United States (A) and an ultimate destination or initial origin in Japan (B); and
(3) AC represents the passenger traffic transported on a flight to, from, or via Japan with
an initial origin or ultimate destination in the United States (A) and an ultimate destination or
initial origin in third countries intermediate to, or beyond, Japan (C).
(4) Connecting passengers to and from the airline's homeland, on a flight of the same
airline or of another airline of the same country, shall constitute third or fourth freedom traffic,
not fifth freedom traffic.
(5) A passenger traveling on an aircraft carrying the code of two or more airlines shall be
counted as a passenger of the airline on whose code the passenger is ticketed.
(iii) U.S. Airline Fifth Freedom Operations to
and from IATA Region TC-2 (Europe/Africa)
The following formula applies to fifth freedom operations of U.S. incumbent combination
airlines to and from IATA Region TC-2 (hereinafter referred to as "Europe/Africa"):
The amount of fifth freedom passenger traffic, measured in passenger miles,
aggregated on a route by route basis, transported by an airline over a six (6) month period
on each specified route including a fifth freedom segment to and from Europe/Africa,
does not exceed the amount of third and fourth freedom passenger traffic transported by
that airline on that route over the same period, similarly measured. This relationship
between the fifth freedom traffic and the third and fourth freedom traffic can be expressed
as follows:
Pax-miles (BC) < pax-miles (AC)
3
(iv) Definitions for U.S. Airline Operations to and from Europe/Africa
For purposes of the above formulae for U.S. airline fifth freedom operations to and from
Europe/Africa:
(1) BC represents the passenger traffic transported by a U.S. airline with an initial origin
or ultimate destination in Japan (B) and an ultimate destination or initial origin in third
countries intermediate to, or beyond, Japan (C).
(2) AC represents the passenger traffic transported on a flight to, from, or via Japan with
an initial origin or ultimate destination in the United States (A) and an ultimate destination or
initial origin in third countries intermediate to, or beyond, Japan (C).
(3) A passenger traveling on an aircraft carrying the code of two or more airlines shall be
counted as a passenger of the airline on whose code the passenger is ticketed.
(b) Formulae Applicable to Fifth Freedom Operations of Japanese Airlines
(i) Japanese Airline Operations to and from IATA
Regions TC-1 (the Americas) and TC-3 (Asia)
The formulae in both provision (b)(i)(1) and provision (b)(i)(2) apply to Japanese
incumbent combination airlines' fifth freedom operations to and from Asia/Americas:
(1) The amount of fifth freedom passenger traffic transported by an airline between the
United States and any third country points, either intermediate to or beyond the United States,
in Asia/Americas measured in passenger miles and aggregated on a system-wide basis over a
six (6) month period, does not exceed the amount of total third and fourth freedom passenger
traffic transported by the airline in Asia/Americas measured and aggregated in a similar
manner. The total third and fourth freedom traffic consists of the Japan-U.S. and the Japan-
third country passenger traffic transported in Asia/Americas by that airline. This relationship
between fifth freedom traffic and the total third and fourth freedom traffic can be expressed as
follows:
Pax-miles (BC) < pax-miles (AB) + pax-miles (AC);
and
(2) The amount of third and fourth freedom passenger traffic transported by the airline
between Japan and any third country points, either intermediate to or beyond the United States
in Asia/Americas, measured in passenger miles and aggregated on a system-wide basis over a
six (6) month period, is not less than twenty-five (25) percent of the amount of fifth freedom
passenger traffic transported by that airline between the United States and any third country
points, either intermediate to or beyond the United States in Asia/Americas, similarly
4
measured. This relationship between the Japan-third country third and fourth freedom traffic
and fifth freedom traffic can be expressed as follows:
Pax-miles (AC)> 25% pax-miles (BC)
(ii) Definitions for Japanese Airline Operations to and from Asia/Americas
For purposes of the above formulae for Japanese airline fifth freedom operations to and
from Asia/Americas:
(1) BC represents the passenger traffic transported by a Japanese airline with an initial
origin or ultimate destination in the United States (B) and an ultimate destination or initial
origin in third countries intermediate to, or beyond, the United States (C);
(2) AB represents the passenger traffic with an initial origin or ultimate destination in
Japan (A) and an ultimate destination or initial origin in the United States (B); and
(3) AC represents the passenger traffic transported on a flight to, from, or via the United
States with an initial origin or ultimate destination in Japan (A) and an ultimate destination or
initial origin in third countries intermediate to or beyond the United States (C).
(4) Connecting passengers to and from the airline's homeland, on a flight of the same
airline or of another airline of the same country, shall constitute third or fourth freedom traffic,
not fifth freedom traffic.
(5) A passenger traveling on an aircraft carrying the code of two or more airlines shall be
counted as a passenger of the airline on whose code the passenger is ticketed.
(iii) Japanese Airline Fifth Freedom Operations to and from Europe/Africa
The following formula applies to fifth freedom operations of Japanese incumbent
combination airlines to and from Europe/Africa:
The amount of fifth freedom passenger traffic, measured in passenger miles,
aggregated on a route by route basis, transported by an airline over a six (6) month period
on each specified route including a fifth freedom segment to and from Europe/Africa,
does not exceed the amount of third and fourth freedom passenger traffic transported by
that airline on that route over the same period, similarly measured. This relationship
between the fifth freedom traffic and the third and fourth freedom traffic can be
expressed as follows:
Pax-miles (BC) < pax-miles (AC)
5
(iv) Definitions for Japanese Airline Operations to and from Europe/Africa
For purposes of the above formulae for Japanese airline fifth freedom operations to and
from Europe/Africa:
(1) BC represents the passenger traffic transported by a Japanese airline with an initial
origin or ultimate destination in the United States (B) and an ultimate destination or initial
origin in third countries intermediate to, or beyond, the United States (C);
(2) AC represents the passenger traffic transported on a flight to, from, or via the United
States with an initial origin or ultimate destination in Japan (A) and an ultimate destination or
initial origin in third countries intermediate to, or beyond, the United States (C).
(3) A passenger traveling on an aircraft carrying the code of two or more airlines shall be
counted as a passenger of the airline on whose code the passenger is ticketed.
B. NON-INCUMBENT COMBINATION AIRLINES
1. Designations
(a) Each Party may designate, pursuant to the 1952 Agreement, up to four (4) airlines,
including any airlines, other than incumbent combination airlines, designated under the 1952
Agreement and all agreements and understandings related thereto (hereinafter referred to as the
"prior agreements"), to operate combination services as non-incumbent combination airlines
(hereinafter referred to as the "non-incumbent combination airlines").5
(b) Effective January 1, 2000, each Party may designate a fifth non-incumbent
combination airline.
2. Non-Restricted Frequencies
Non-incumbent combination airlines of each Party, in the aggregate, may operate, in
addition to frequencies authorized pursuant to the prior agreements, up to twenty-eight (28)
weekly round-trip frequencies between any point or points in the territories of the Parties,
regardless of any restrictions on designations or frequencies on those city-pair markets under
the prior agreements.
5 Subject to the right of the Parties, provided for in the 1952 Agreement, to substitute airlines,
pursuant to subsection 6, below, these airlines shall include, for the United States, the current non-
incumbent combination airlines--Delta Airlines, American Airlines, and Continental Airlines/Continental
Micronesia Airlines/Air Micronesia.
6
3. Restricted Frequencies
(a) Non-incumbent combination airlines of each Party, in the aggregate, may operate, in
addition to the frequencies authorized pursuant to the prior agreements, up to forty-two (42)
weekly round-trip frequencies between any point or points in the territories of the Parties,
regardless of any restrictions on designations or frequencies on those city-pair markets under
the prior agreements, except in the following city-pair markets:
Tokyo - New York*
Tokyo - Chicago
Tokyo - San Francisco*
Tokyo - Los Angeles
Tokyo - Honolulu
Tokyo - Guam/Saipan
Osaka - Los Angeles
Osaka - Honolulu
Osaka - Guam/Saipan
Nagoya - Honolulu
Fukuoka - Honolulu
* For purposes of identifying restricted city-pair markets, Newark, New Jersey, shall be
treated as a separate point from New York, New York; and Oakland, California, shall be
treated as a separate point from San Francisco, California.
(b) With respect to city-pair markets listed in paragraph B 3(a), above, if (i) no airline of
the other Party is serving a city-pair market, or (ii) if the level of service provided by the
airlines of both Parties in the market falls to six (6) or fewer round-trip frequencies per week, in
the aggregate, for a one (1) year period, aeronautical authorities of either Party may request
consultations to determine whether there are public interest reasons for permitting such a city-
pair to be served with restricted frequencies.
4. Reallocation of Frequencies
Each Party shall have the right to:
(a) Reallocate to any of its non-incumbent combination airlines any frequencies provided
for in the prior agreements, except those provided for routes between Guam/Saipan and Japan,6
that are allocated to that Party's incumbent combination airlines, including All Nippon
Airways, as of January 1, 1998. Following such reallocation, these frequencies may be used
for operations between any point or points in the territories of the Parties, regardless of any
restrictions on designations or frequencies on those city-pair markets under the prior
agreements, except in the city-pair markets restricted pursuant to subsection I B 3, above.
6 For Guam/Saipan-Japan routes, see subsection I B 7.
7
These frequencies shall be in addition to the frequencies provided for in subsections I B 2 and
3, above; and
(b) On sixty (60) days notice, reallocate the frequencies provided for in subsections I B 2,
3 and 4 for non-incumbent combination airlines among any of its non-incumbent combination
airlines and to change the points selected for each frequency, subject to any point limitations
applicable to such frequency in accordance with subsection 3, regardless of any restrictions on
designations or frequencies on those city-pair markets under the prior agreements.
5. Right to Switch Points
(a) Except with respect to Guam/Saipan-Japan routes, which are addressed in subsection
I B 7, below, each Party shall have the right to select up to three (3) non-incumbent
combination airlines, each of which shall, upon six (6) months notice to the aeronautical
authorities of the other Party, be permitted to switch, on a one time, one city-pair basis, the
point selected in its territory for frequencies provided for in the prior agreements and allocated
as of January 1, 1998, to that airline, to any other point in its territory, regardless of any
restrictions on designations or frequencies on those city-pair markets under the prior
agreements. This right is subject to the limitation that if the city-pair market from which the
switch will be made is not on the list of restricted city-pairs described in paragraph I B 3(a),
then the frequency may not be switched to a city-pair market on that list.
(b) In lieu of one of the switches permitted under paragraph (a), above, the United States
shall have the right to authorize its non-incumbent combination airline authorized as of January
1, 1998,7 under paragraph II of the 1985 interim agreement, concluded May 1, 1985
(hereinafter referred to as the "1985 MOU") to serve Saipan-Tokyo as a coterminal with Guam-
Tokyo, to operate up to seven (7) weekly round-trip frequencies on any city-pair, except the
restricted city-pairs identified in paragraph I B 3(a), above, in addition to frequencies provided
for elsewhere in this 1998 MOU or the prior agreements. If the airline switches from Saipan-
Tokyo to another city-pair, pursuant to this paragraph, then: (i) that airline may not be selected,
under subsection 7 (Guam/Saipan-Japan Routes) of this 1998 MOU, to operate the Saipan-
Tokyo route; and (ii) the number of non-incumbent combination airlines to be selected by the
Party under paragraph I B 7 (a), below, shall be reduced to one (1) for Saipan-Tokyo. The Party
may reverse the switch and then re-authorize the same airline to serve Saipan-Tokyo with
unlimited frequencies, as prior to the switch.8
7 The referenced airline is Continental Airlines/Continental Micronesia Airlines/Air Micronesia.
8 Service by the referenced airline on the Guam-Tokyo city-pair shall not be affected by an
exercise of rights under this paragraph (b).
8
6. Right to Substitute Airlines
Each Party may designate, on sixty (60) days notice, substitute airlines for any of its non-
incumbent combination airlines, subject to the limitation that the total number of airlines
designated at any one time shall not exceed the number of authorized designations, as described
in subsection I B 1(Designations), above.
7. Guam/Saipan - Japan Routes
The provisions of this subsection supersede any provision regarding Guam/Saipan-Japan
routes contained in the prior agreements.
(a) Each Party may select two (2) non-incumbent combination airlines, including those
non-incumbent combination airlines that were designated under the prior agreements, to operate
on each of the following Guam/Saipan-Japan routes, without any limitation on frequencies or
capacity.
Guam/Saipan-Tokyo
Guam/Saipan-Osaka
Guam/Saipan-Nagoya
Guam/Saipan-Fukuoka
Guam/Saipan-Naha
(b) In addition, each Party may select a non-incumbent combination airline or airlines,
including the non-incumbent combination airline that was designated under the prior agreements,
to operate services between Guam/Saipan and any two (2) points in Japan other than Tokyo,
Osaka, Nagoya, Fukuoka and Naha, without any limitation on frequencies or capacity. Each
Party may select one (1) non-incumbent combination airline to serve each of these two points.
Each Party may select the points for its airlines and, upon sixty (60) days notice to the other
Party, may change the selection.
(c) For each route listed in paragraph (a) of this subsection 7, in lieu of selecting two (2)
non-incumbent combination airlines, each Party may select a non-incumbent combination airline
to operate on a route between Guam/Saipan and a new point in Japan other than those permitted
under paragraphs (a) and (b) of this subsection 7, without any limitation on frequencies or
capacity. Each Party may select such new points in Japan for its airlines, subject to the
following:
(i) A Party may not select a point in Japan that is being served to or from Guam/Saipan
by an airline of the other Party that operated such route as of January 1, 1998, provided that,
in the event such airline terminates services on that Guam/Saipan-Japan route for a six (6)
month period, such route shall become eligible for service;
(ii) Once a Party selects a new point in Japan under this paragraph (c), the number of
non-incumbent combination airlines of the Party permitted under paragraph (a) of this
9
subsection 7 on the route concerned shall become one (1), except that, on sixty (60) days
notice, the Party may switch the selection back to the original Guam/Saipan-Japan route and
the number of non-incumbent combination airlines to be selected on the route under
paragraph (a) of this subsection 7 shall be restored to two (2); and
(iii) No more than a total of four new points in Japan may be served under this paragraph
(c) at any time.
(d) The provisions of this subsection 7 shall not be construed to constrain any right of
incumbent combination airlines under subsection I A 1 or that of non-incumbent combination
airlines under subsections I B 2 and 3.
Part II. ALL-CARGO SERVICES
Part I (All-Cargo Services) of the 1996 all-cargo agreement, concluded August 21, 1996
(hereinafter referred to as the "1996 MOU"), shall be amended to read as follows:
A. INCUMBENT ALL-CARGO AIRLINES
1. The Japanese Incumbent All-Cargo Airlines
Two (2) airlines designated by Japan (hereinafter referred to as the "Japanese
incumbent all-cargo airlines")9 pursuant to the 1952 Agreement may operate all-cargo
services between any point or points behind Japan, any point or points in Japan, any
intermediate point or points, any point or points in the United States, and any point or points
beyond the United States, without any limitation on frequency, capacity, or traffic
composition.10
2. The U.S. Incumbent All-Cargo Airlines
Three (3) airlines designated by the United States (hereinafter referred to as the "U.S.
incumbent all-cargo airlines")11 pursuant to the 1952 Agreement may operate all-cargo
services between any point or points behind the United States, any point or points in the
9 Subject to the right of Japan, provided for in the 1952 Agreement, to substitute airlines, the
Japanese incumbent all-cargo airlines shall be Japan Airlines and Nippon Cargo Airlines.
10 No formula will apply to Japanese incumbent all-cargo services.
11 Subject to the right of the United States, provided for in the 1952 Agreement, to substitute
airlines, the U.S. incumbent all-cargo airlines shall be Federal Express, Northwest Airlines, and United
Airlines.
10
United States, any intermediate point or points, any point or points in Japan, and any point or
points beyond Japan, without any limitation on frequency, capacity, or traffic composition.12
B. NON-INCUMBENT ALL-CARGO AIRLINES
1. New Non-Incumbent All-Cargo Airlines Designated by Japan
(a) Japan may designate one (1) airline other than incumbent all-cargo airlines to operate
all-cargo services from any point or points in Japan.
(b) The airline designated under the preceding paragraph B 1 (a) may operate the
frequencies that were available to Nippon Cargo Airlines under the 1985 MOU, the 1989 interim
agreement, concluded December 27, 1989 (hereinafter referred to as the "1989 MOU") and the
1996 interim agreement concluded February 26, 1996 (hereinafter referred to as the "1995
ROC") on the routes including any of the four (4) points in the United States to which Nippon
Cargo Airlines was authorized to operate under the 1985 MOU, the 1989 MOU, and the 1995
ROC with full coterminalization.13
(c) In addition to the four (4) points mentioned in paragraph (b), above, the airline
designated pursuant to paragraph B 1(a), above, may operate all-cargo services to three (3)
additional points in the United States. The three (3) additional points may be selected, or
changed, on sixty (60) days notice by Japan to the United States.
(d) In addition to the frequencies referred to in paragraph B 1(b), above, the airline
designated pursuant to paragraph B 1(a), above, may operate all-cargo services with eighteen
(18) additional weekly frequencies. These eighteen (18) frequencies may be operated by the
airline with full coterminalization to all seven (7) points in the United States mentioned in
paragraphs B 1(b) and B 1(c), above.
(e) The airline designated under paragraph B 1(a), above, may operate beyond each of its
authorized points in the United States to two (2) points beyond the United States, with full traffic
rights between all points in the routes. Japan may select the same or different beyond points for
each of the authorized points in the United States and may change the beyond points with sixty
(60) days notice.
(f) In addition to the airline designated pursuant to paragraph B 1(a), above, Japan may
designate one (1) airline (hereinafter referred to as the "new entrant"), other than incumbent all-
12 No formula will apply to U.S. incumbent all-cargo services.
13 The referenced four (4) points in the United States to which Nippon Cargo Airlines was
authorized to operate are Los Angeles, San Francisco, New York, and Chicago. Any frequencies
operated by Nippon Cargo Airlines shall not be counted against frequencies provided for in the 1985
MOU, the 1989 MOU, or the 1995 ROC.
11
cargo airlines, to operate all-cargo services between any point or points in Japan and one (1) of
the points in the United States to which the airline designated pursuant to paragraph B 1(a),
above, may operate. The new entrant may use up to six (6) of any weekly frequencies available
to, but not used by the airline designated pursuant to paragraph B 1(a), above. The point in the
United States may be selected, or changed, on sixty (60) days notice by Japan to the United
States.
(g) Operations of Japan Airlines and Nippon Cargo Airlines shall not be counted for
purposes of Section III (Frequency Limitations) of the 1989 MOU.
2. Non-Incumbent All-Cargo Airlines Designated
by the United States under the Prior Agreements
(a) The non-incumbent all-cargo airline designated by the United States under the 1989
MOU may operate eighteen (18) weekly all-cargo frequencies, in the aggregate, including the
frequencies authorized for the airline under the 1989 MOU, between any point or points in the
United States, any two (2) points in Japan, and beyond each point in Japan to and from any two
(2) points, with full traffic rights between all points on the routes. Such airline may
coterminalize all the points in Japan to which it may operate.
(b) These rights shall be subject to the limitation that no more than six (6) weekly
frequencies may be operated on routings including Tokyo and no more than twelve (12) weekly
frequencies on routings including Osaka.
(c) The United States may select the same or different beyond points for each of the two
points selected in Japan. The points selected by the United States in Japan and the beyond points
may be changed on sixty (60) days notice by the United States to Japan.
(d) The United States may designate14 one (1) airline that was not operating scheduled
combination or all-cargo services between the United States and Japan as of the date of the
signature of the 1996 MOU to operate all-cargo services with six (6) weekly frequencies, in the
aggregate, between any point or points in the United States, any two (2) points in Japan, and,
from each point in Japan, any one (1) beyond point, with full traffic rights between all points on
the routes. Such airline may coterminalize all the points in Japan to which it may operate. The
United States may select the same or different beyond points for each of the two points selected
in Japan and may change the points in Japan and the beyond points with sixty (60) days notice by
the United States to Japan.
14 An airline designated under the 1996 MOU prior to this 1998 MOU need not be redesignated by
the United States.
12
3. Additional All-Cargo Entrants for Japan and the United States
Effective January 1, 2002, each Party may designate one (1) airline, in addition to
designations permitted elsewhere in this 1998 MOU or under the prior agreements, to operate as
a non-incumbent all-cargo airline. Airlines designated under this provision may operate up to
five (5) weekly frequencies between any point or points in the territory of the Party designating
the airline, any one (1) point in the territory of the other Party, and any one (1) point beyond the
territory of the other Party, without local traffic rights on the beyond sector, provided that Tokyo
and Osaka and any U.S. point served by a Japanese all-cargo airline as of January 1, 1998, may
not be served.15 The Party designating the airline shall select, and may change on sixty (60) days
notice, the point in the territory of the other Party and the beyond point.
4. Provisions Applicable to All-Cargo Airlines Designated by Japan and the United States
(a) For purposes of frequency limitations on all-cargo services under the 1985 MOU, the
1989 MOU, the 1995 ROC, and this 1996 MOU, as amended, any all-cargo flight from the
territory of either Party to the territory of the other Party, and a return flight in the opposite
direction, shall together constitute one frequency regardless of the number of traffic stops made
in the territory of either Party or whether or not the flight operates beyond the territory of the
other Party. If an airline does not operate a return flight, the flight in one direction shall still
constitute one frequency.
(b) For purposes of all-cargo services to the beyond points referred to in paragraphs B
1(e) and B 2(a), above, the two beyond points may be served on a single flight or separate flights.
(c) Each Party may, on sixty (60) days notice, designate substitute airlines for any of the
incumbent and non-incumbent all-cargo airlines.
Part III. CHARTER SERVICES
The provisions in this Part (Charter Services) supersede the limitations on passenger and
cargo charter operations between Japan and the United States contained in the prior agreements.
A. EQUALIZATION OF CHARTER FREQUENCIES
Airlines of each Party, in the aggregate, may operate up to four hundred (400) one-way
charter flights per year between any point or points in the United States and any point or points
in Japan, subject to the limitation that no more than three hundred (300) one-way charter flights
may be operated to or from Tokyo or Osaka in the aggregate, by the airlines of each Party.
15 The U.S. points served by an Japanese all-cargo airline as of January 1, 1998, are: Anchorage,
Los Angeles, San Francisco, Chicago, New York, and Atlanta. For purposes of this Section, Newark,
New Jersey, shall be treated as separate from New York, New York, and Oakland, California, shall be
treated as a separate point from San Francisco, California.
13
Charter operations shall be subject to country-of-origin rules, except as provided in Section C,
below.
B. EXPANSION OF CHARTER OPPORTUNITIES
1. Effective January 1, 2000, superseding Section III A, above, airlines of each Party, in
the aggregate, may operate up to six hundred (600) one-way charter flights per year between any
point or points in the United States and any point or points in Japan, subject to the limitation that
no more than three hundred (300) one-way charter flights may be operated to or from Tokyo by
the airlines of each Party. Charter operations shall be subject to country-of-origin rules, except
as provided in Section C, below.
2. Effective January 1, 2002, superseding subsection III B 1, above, airlines of each Party,
in the aggregate, may operate up to eight hundred (800) one-way charter flights per year between
any point or points in the United States and any point or points in Japan, subject to the limitation
that no more than three hundred (300) one-way charter flights may be operated to or from Tokyo
by the airlines of each Party. Charter operations shall be subject to country-of-origin rules,
except as provided in Section C, below.
C. FREIGHT FORWARDER CHARTERS
1. Airlines of the United States, in the aggregate, may operate each year up to one
hundred and fifty (150) air freight forwarder charter units, originating in Japan and destined for
the United States, subject to the limitation set forth in Section A, above. The following
equivalencies will apply for purposes of counting units:
DC-8F or equivalent aircraft 1
DC-10 or L-1011 2
B747F 2.5
2. Effective January 1, 2000, superseding subparagraph 1, above, airlines of the United
States, in the aggregate, may operate each year up to two hundred and twenty-five (225) air
freight forwarder charter flights, without restriction as to aircraft type, originating in Japan and
destined for the United States, subject to the limitation set forth in the applicable subsection of
Section III B (Expansion of Charter Opportunities), above.
D. LEASING ARRANGEMENTS
Subject to country-of-origin rules and the requirements normally applied to such
arrangements, charter airlines may engage in leasing arrangements with airlines performing
scheduled or charter services.
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Part IV. COOPERATIVE MARKETING ARRANGEMENTS
FOR COMBINATION AND ALL-CARGO SERVICES
A. OPERATION OF COOPERATIVE MARKETING ARRANGEMENTS -
REQUIREMENTS FOR THE OPERATING AIRLINE
In operating the authorized services on routes that include points in the territories of the
Parties and also may include behind, intermediate, and beyond points, any designated airline of
one Party may enter into cooperative marketing arrangements such as blocked-space, codeshare
or leasing arrangements with:
1. An airline or airlines of the other Party;
2. An airline or airlines of the same Party, subject to the limitations in Section IV E
(Limitations on Same Country Airline Codesharing), below;
3. An airline or airlines of a third country on segment(s) that do not involve traffic,
carried under the code of the third country non-operating airline, destined to or originating in the
territory of the other Party; provided that the third country gives assurances to the other Party
that it will permit the airlines of the other Party to enter into codeshare arrangements with other
airlines on authorized routes between the territories of the Parties and the third country;
- In conjunction with this right, if an airline of one Party seeks to enter into a codeshare
arrangement with an airline of a third country on route segment(s) between the territories of the
Parties and the third country; the other Party shall permit the airlines of that third country to
codeshare with other airlines on route segment(s) between the territories of the Parties and the
third country for which the airlines involved hold authority, provided that the third country gives
assurances to the other Party that it will permit the airlines of the other Party to enter into
codeshare arrangements with other airlines on any authorized route segment(s) between the
territories of the Parties and the third country. Should the third country subsequently deny a
request of the airlines of the other Party to enter into codeshare arrangements with other airlines
on such routes, then the other Party shall have no obligation to approve codeshare services
between the airlines of the first Party and the airlines of that third country;
4. An airline or airlines of a third country, except as provided in subsection IV A 5,
below, on segment(s) that involve traffic, carried under the code of the third country non-
operating airline, destined to or originating in the territory of the other Party; provided that such
third country authorizes or allows comparable arrangements between the airlines of the other
Party and other airlines on services to, from and via such third country;
5. An airline or airlines of a third country in the Americas, on segment(s) that involve
traffic, carried under the code of the third country non-operating airline, destined to or
originating in the territory of the other Party, only at the discretion of the aeronautical authorities
of the Parties;
15
provided that all airlines in such arrangements (i) hold the appropriate authority, except as
specifically provided in Section IV D, below, and (ii) meet the requirements normally applied to
such arrangements. An airline authorized only for all-cargo services may not codeshare on
combination services and an airline authorized only for combination services may not codeshare
on all-cargo services.
B. OPERATION OF COOPERATIVE MARKETING ARRANGEMENTS -
REQUIREMENTS FOR THE NON-OPERATING AIRLINE
On services on routes that include points in the territories of the Parties and also may
include behind, intermediate, and beyond points, using aircraft operated by an airline or airlines
described below, any designated airline of one Party may enter into cooperative marketing
arrangements such as blocked-space, codeshare or leasing arrangements, with:
1. An airline or airlines of the other Party;
2. An airline or airlines of the same Party, subject to the limitations in Section IV E
(Limitations on Same Country Airline Codesharing), below;
3. An airline or airlines of a third country, on segment(s) that do not involve traffic
carried under the code of the non-operating airline of the Party destined to or originating in the
territory of the other Party; provided that the third country gives assurances to the other Party
that it will permit the airlines of the other Party to enter into codeshare arrangements with other
airlines on authorized routes between the territories of the Parties and the third country;
- In conjunction with this right, if an airline of one Party seeks to enter into a codeshare
arrangement with an airline of a third country on route segment(s) between the territories of the
Parties and the third country; the other Party shall permit the airlines of that third country to
codeshare with other airlines on route segment(s) between the territories of the Parties and the
third country for which the airlines involved hold authority, provided that the third country gives
assurances to the other Party that it will permit the airlines of the other Party to enter into
codeshare arrangements with other airlines on any authorized route segment(s) between the
territories of the Parties and the third country. Should the third country subsequently deny a
request of the airlines of the other Party to enter into codeshare arrangements with other airlines
on such routes, then the other Party shall have no obligation to approve codeshare services
between the airlines of the first Party and the airlines of that third country;
4. An airline or airlines of a third country, except as provided in subsection IV B 5,
below, on segment(s) that involve traffic, carried under the code of the non-operating airline of a
Party, destined to or originating in the territory of the other Party; provided that such third
country authorizes or allows comparable arrangements between the airlines of the other Party and
other airlines on services to, from and via such third country;
5. An airline or airlines of a third country in the Americas, on segment(s) that involve
traffic, carried under the code of the non-operating airline of the Party, destined to or originating
16
in the territory of the other Party, only at the discretion of the aeronautical authorities of the
Parties;
provided that all airlines in such arrangements (i) hold the appropriate authority, except as
specifically provided in Section D, below, and (ii) meet the requirements normally applied to
such arrangements. For beyond and intermediate point services of the non-operating airline of the
first Party, the codeshare services may be offered only on a blind sector basis. An airline
authorized only for all-cargo services may not codeshare on combination services and an airline
authorized only for combination services may not codeshare on all-cargo services.
C. COUNTING CAPACITY OR FREQUENCIES
1. Where a non-incumbent airline of either Party operates, into the territory of the other
Party, aircraft that is involved in codeshare operations under this Part IV (Cooperative Marketing
Arrangements for Combination and All-Cargo Services), the frequencies of such operations shall
be counted against any limitations on frequencies applicable under this 1998 MOU or the prior
agreements to the operating airline.
2. Where a non-incumbent airline of either Party holds out its services on aircraft
operated into the territory of the other Party by another airline under a codeshare arrangement
under this Section, the frequencies of such operations shall not be counted against any limitation
on frequencies applicable under this 1998 MOU or the prior agreements to the non-incumbent
airline.
3. Without prejudice to the provisions of subsections A 4 and B 4 of this Part, any
codeshare operations between an airline of a Party and an airline of a third country that involves
traffic carried under the code of the airline of the third country, which is destined to or
originating in the territory of the other Party, shall be subject to any applicable limitations on
capacity or frequency contained in agreements between the other Party and the third country.
4. Any codeshare operations between an airline of a Party and an airline of a third
country that do not involve traffic, carried under the code of the airline of the third country,
which is destined to or originating in the territory of the other Party, shall not be subject to any
limitation on capacity or frequency contained in agreements between the other Party and the third
country.
D. CODESHARE ONLY AUTHORITY FOR NON-INCUMBENT COMBINATION
AND NON-INCUMBENT ALL-CARGO AIRLINES TO HOLD OUT SERVICES
UNDER CODESHARE ARRANGEMENTS ON ROUTES FOR WHICH THEY
LACK OPERATING AUTHORITY
Subject to the requirements in Section IV B, and the limitations in Section IV E
(Limitations on Same Country Airline Codesharing), each Party may grant to its non-incumbent
combination airlines and non-incumbent all-cargo airlines authority to place their code on
services operated by airlines of either Party or by airlines of third countries, under codeshare
17
arrangements, between any point or points behind the territories of the Parties, any point or
points in the territories of the Parties, and any point or points intermediate to and beyond the
territories of the Parties, whether or not they hold authority to operate services on the routes,
provided that for beyond and intermediate point services of non-incumbent combination and all-
cargo airlines the codeshare service may be offered only on a blind sector basis.
E. LIMITATIONS ON SAME COUNTRY AIRLINE CODESHARING
Codesharing between airlines of the same Party shall be subject to the following
limitations, except that codeshare operations involving airlines of the same Party that also
involve an airline or airlines of the other Party shall not be subject to any restriction in this
Section (Limitations on Same Country Airline Codesharing), and shall not be counted against
any limitation in this Section.
1. Any designated airline may enter into codeshare arrangements with any other airline
of the same Party on behind-gateway services in the territory of the Party without limitation.
2. No airlines of one Party may engage in codeshare arrangements in all-cargo services
with other airlines of the same Party, except as provided for in subsection 1 of this Section.
Category A and Category B Airlines (for combination services)
3. Designated combination airlines of either Party not providing service between the
mainland U.S. and Japan as of January 1, 1998, shall be considered, for the purpose of this
Section, to be "Category A Airlines." Designated combination airlines that were providing
service between the mainland U.S. and Japan as of January 1, 1998, shall be considered, for the
purposes of this Section, to be "Category B Airlines."16
4. Category B Airlines may not enter into codeshare arrangements with other Category
B Airlines of the same Party on gateway-to-gateway or beyond segments.
5. Category B Airlines may enter into codeshare arrangements with Category A Airlines
of the same Party on gateway-to-gateway services operated by the Category A Airlines.
6. Category A Airlines may enter into codeshare arrangements with any designated
airlines of the same Party on gateway-to-gateway services operated by the other designated
airline, subject to the limitation that:
- In the case of city-pair markets listed in subsection I B 3 of this 1998 MOU, a Category
A Airline may codeshare with an incumbent airline of the same country only up to the number of
16 For the United States, the Category B Airlines are United Airlines, Northwest Airlines, American
Airlines, and Delta Airlines. For Japan, the Category B Airlines are Japan Airlines and All Nippon
Airways.
18
weekly frequencies indicated for that incumbent airline in the Appendix attached hereto for the
specific city-pair,17 except that this right may not be implemented on a U.S.-Japan city-pair
where both airlines were operating a service as of January 1, 1998.18
7. Airlines of each Party, in the aggregate, may operate twenty-eight (28) weekly round-
trip frequencies under codeshare arrangements pursuant to subsections 5 and 6 of this Section.
8. The number of weekly round-trip frequencies specified in subsection 7 of this Section
shall be increased if a Category A Airline of the other Party engages in codesharing on flights
carrying the codes of two or more airlines of the other Party engaged in codeshare arrangements
pursuant to subsections 5 or 6 of this Section. The number of such additional frequencies shall
be equal to the number of weekly round-trip frequencies on which the Category A Airline of the
other Party codeshares on such flights, on any gateway-to-gateway segment.
9. Notwithstanding the above provisions, same country codesharing services shall not be
initiated on any gateway-to-gateway route segment(s) for a period of three (3) years after service
has been inaugurated on that segment(s) by a Category A Airline of the other Party that does not
have a codesharing relationship either with an airline of the other Party or an airline of the same
Party.
10. Category A Airlines may enter into codeshare arrangements with incumbent
combination airlines of the same Party on beyond services on a blind-sector basis. The number
of frequencies operated under such codeshare arrangements shall be twenty-one (21) weekly
round-trip frequencies, in the aggregate, for each Party. This number of frequencies shall be
increased if a Category A Airline of the other Party enters into a codeshare arrangement with a
designated airline of the first Party, by the number equal to the number of weekly round-trip
frequencies on which the Category A Airline of the other Party codeshares with the designated
airline of the first Party on any segment beyond the territory of either Party.
Part V. CHANGE OF GAUGE
A. FOR COMBINATION SERVICES
1. For combination services, on any segment(s) of the authorized routes, any designated
airline may perform international air transportation without any limitation as to change, in both
the inbound and outbound directions, at any point on the route, in type or number of aircraft
operated; provided that:
17 The Appendix attached hereto reflects weekly frequencies for the listed airlines, based on
schedules for the 1997/1998 IATA winter season.
18 The referenced city-pairs are identified from the information in the Appendix.
19
(a) In the outbound direction, transportation beyond such point is a continuation of the
transportation from the territory of the Party that has designated the airline and, in the inbound
direction, the transportation to the territory of the Party that has designated the airline is a
continuation of the transportation from beyond such point;
(b) For flights outbound from the homeland, onward transportation from the point of
change of gauge in the territory of the other Party is performed by a single or multiple flights
with (an) aircraft whose capacity in total is not greater than ten (10) percent more than that of the
aircraft arriving at the change of gauge point; and
(c) For flights inbound to the homeland, transportation to the point of change of gauge in
the territory of the other Party is performed by a single or multiple flights with (an) aircraft
having the capacity in total not greater than ten (10) percent more than that of the aircraft
performing onward transportation from the point of change of gauge.
2. Transportation performed on aircraft of other airlines under codeshare arrangements
shall not be counted for purposes of this Section.
B. FOR ALL-CARGO SERVICES
1. For all-cargo services, on any segment(s) of the authorized routes, any designated
airline may perform international air transportation without any limitation as to change, in both
the inbound and outbound directions, at any point on the route, in type or number of aircraft
operated; provided that:
(a) In the outbound direction, transportation beyond such point is a continuation of the
transportation from the territory of the Party that has designated the airline and, in the inbound
direction, the transportation to the territory of the Party that has designated the airline is a
continuation of the transportation from beyond such point; and
(b) For each flight outbound from the homeland, when a change of gauge takes place in
the territory of the other Party, the onward transportation to a point or points in third countries
may be performed by any number of aircraft as long as the aggregate capacity, measured in cubic
footage, of those aircraft does not exceed the capacity of three 747-100 freighters.
2. Transportation performed on aircraft of other airlines under codeshare arrangements
shall not be counted for purposes of this Section .
Part VI. OPERATIONAL FLEXIBILITY
With respect to all services described above, subject to the route or city-pair list
restrictions under this 1998 MOU or the prior agreements, airlines designated by the Parties may,
at their option:
A. Operate flights in either or both directions;
20
B. Combine different flight numbers within one aircraft operation;
C. Serve behind, intermediate, and beyond points and points in the territories of the
Parties on the routes in any combination and in any order;
D. Omit stops at any point or points; and
E. Transfer traffic from any of its aircraft to any of its other aircraft at any point on the
routes;
without directional or geographic limitation and without loss of any right to carry traffic
otherwise permissible under this 1998 MOU; provided that the service serves a point in the
territory of the Party designating the airline.
Part VII. PRICING AND DISTRIBUTION
1. There shall be a fair and equal opportunity for the airlines of both Parties to contract
with wholesalers, travel agents, and other similar bodies, if any, for the sales of their air
transportation services in accordance with laws and regulations of the Party where such a
contract is concluded. Airlines of both Parties also shall be free to market their air transportation
services directly to consumers, inter alia, by establishing their own sales channels to this end in
accordance with laws and regulations of the Party where they market the service.
2. Experts of both Parties will meet by May 1, 1998, to consider steps to liberalize
pricing, including zone pricing.
3. Until such time as a new agreement is reached on pricing, aeronautical authorities of
each Party will flexibly approve air fares proposed by airlines. This would require, for example,
at a minimum, approval of a proposed fare or rate of airlines of either Party that matches any
competitive fare or rate which is permitted under the current regime.
Part VIII. FUTURE NEGOTIATIONS
A. Negotiations shall commence no later than January 1, 2001, with the objective of
fully liberalizing the civil aviation relationship between Japan and the United States.
B. If no agreement is reached as a result of the above-referenced negotiations by January
1, 2002, then additional opportunities shall become available, as described in Part IX, below.
Part IX. ADDITIONAL OPPORTUNITIES FOR COMBINATION SERVICES
Frequencies provided for in this Part become available on the dates provided for in this
Part or when non-incumbent combination airlines of either side are operating fifty-six (56)
weekly round-trip frequencies authorized by this 1998 MOU, whichever is later; unless
21
otherwise provided in a new agreement between the Parties, as contemplated by Part VIII (Future
Negotiations), that has entered into force or has otherwise been implemented by both Parties.
A. NEW FREQUENCIES FOR NON-INCUMBENT COMBINATION AIRLINES
1. Effective January 1, 2002:
(a) The aggregate number of non-restricted weekly round-trip frequencies, provided
for in subsection I B 2 of this 1998 MOU, shall increase by seven (7);
(b) An additional fourteen (14) weekly round-trip frequencies, in the aggregate, may
be operated by non-incumbent combination airlines of each Party on routes including any
city-pair markets between the territories of the Parties other than Tokyo-New York, Tokyo-
Chicago, or Tokyo-Honolulu.19
2. Effective January 1, 2004:
The aggregate number of non-restricted weekly round-trip frequencies, provided for
in subsection I B 2 of this 1998 MOU, shall increase by an additional seven (7).
3. Effective January 1, 2005:
An additional seven (7) weekly round-trip frequencies, in the aggregate, may be operated
by non-incumbent combination airlines of each Party on routes including any city-pair markets
between the territories of the Parties other than Tokyo-New York, Tokyo-Chicago, or Tokyo-
Honolulu.
4. Effective as of the first date All Nippon Airways operates a number of trans-Pacific
weekly round-trip frequencies that exceeds by seventy (70) or more the number of such
frequencies operated by that airline as of January 1, 1998,20 the aggregate number of non-
restricted weekly round-trip frequencies, provided for in subsection I B 2 of this 1998 MOU shall
increase by an additional seven (7).
B. CONVERSION OF THE FORTY-TWO (42) RESTRICTED FREQUENCIES
FOR NON-INCUMBENT COMBINATION AIRLINES
1. Effective January 1, 2002:
19 For purposes of city-pair restrictions contained in this Part, Newark, New Jersey, shall be treated
as a separate point from New York, New York.
20 As of January 1, 1998, All Nippon Airways operated eighteen (18) trans-Pacific weekly round-
trip frequencies.
22
(a) Fourteen (14) of the forty-two (42) restricted frequencies, provided for in subsection I
B 3 of this 1998 MOU, shall be converted to non-restricted frequencies, thereby increasing the
aggregate number of non-restricted frequencies, provided for in subsection I B 2 of this 1998
MOU, by an additional fourteen (14);
(b) For seven (7) of the twenty-eight (28) remaining restricted frequencies provided for in
paragraph I B 3(a) of this 1998 MOU, the restrictions shall be modified to permit operation of
those frequencies by non-incumbent combination airlines of each Party on routes including any
city-pair markets between the territories of the Parties other than Tokyo-New York, Tokyo-
Chicago, or Tokyo-Honolulu.
2. Effective January 1, 2004:
For seven (7) of the twenty-one (21) remaining restricted frequencies provided for in
subsection I B 3 of this 1998 MOU, the restrictions shall be modified to permit operation of
those frequencies by non-incumbent combination airlines of each Party on routes including any
city-pair markets between the territories of the Parties other than Tokyo-New York, Tokyo-
Chicago, or Tokyo-Honolulu.
3. Effective January 1, 2005:
Seven (7) of the fourteen (14) remaining restricted frequencies, provided for in subsection
I B 3 of this 1998 MOU, shall be converted to non-restricted frequencies, thereby increasing
the aggregate number of non-restricted frequencies, provided for in subsection I B 2 of this
1998 MOU, by an additional seven (7).
Part X. PROCEDURES CONCERNING THE APPLICATION OF
ARTICLES 10, 11, AND 12 OF THE 1952 AGREEMENT
WITH RESPECT TO CAPACITY, FREQUENCY, AND
TRAFFIC COMPOSITION
The following procedures concerning the application of Articles 10, 11, and 12 of the
1952 Agreement shall apply to all approvals and reviews of changes in capacity or frequency of
services, including inaugurations of new services, for all services operated under this 1998 MOU
or the prior agreements, and take precedence over the procedures prescribed in any of the prior
agreements or agreed minutes implementing the 1952 Agreement.
A. GENERAL PROCEDURES
The procedures in this Section (General Procedures) shall apply to all operations of all
airlines, with the sole exception of those operations expressly provided for in Section B of this
Part (Procedures Applicable to Passenger Services on Fifth Freedom Operations to and from
Europe/Africa):
23
1. Airlines of each Party shall follow the procedures normally applied on a
nondiscriminatory basis under the laws and regulations of the other Party relating to approvals or
reviews of changes in capacity or frequency of services, including inaugurations of new services.
2. All changes in capacity or frequency of services, including inaugurations of new
services, of an airline of either Party with respect to any routes or frequencies provided for in this
1998 MOU or the prior agreements, shall be permitted to take effect on the date duly requested
by the airline.
3. The operations of designated airlines of either Party performed in accordance with the
provisions of this 1998 MOU and within the limits of the formulae in subsection I A 2, above, if
applicable, shall be deemed to be in compliance with Articles 10, 11, and 12 of the 1952
Agreement.
4. If the aeronautical authorities of either Party have concerns related to the traffic
composition, frequency, or capacity of operations of an airline of the other Party, they
shall promptly notify the aeronautical authorities of the other Party of their concerns and
the bases therefor and may request consultations under Article 14 of the 1952 Agreement
to discuss any reservations expressed by the aeronautical authorities of the Party in the
light of experience gained as a result of the operations of such services.
5. In consultations concerning fifth freedom operations of incumbent combination
airlines, the aeronautical authorities shall first consider whether the operations at issue are
not within the limits of the applicable formulae in subsection I A 2, above, where applicable. If
the aeronautical authorities reach agreement that the operations are not within the limits of the
applicable formula, then they shall next consider whether the services are consistent with the
relevant provisions of the 1952 Agreement.
6. Subject to the requirements of subsection 7 of this Section, consultations shall be held
promptly following a request therefor, at a time mutually agreed by aeronautical authorities of
both Parties. At such consultations, the aeronautical authorities of both Parties shall seek an
agreement as to whether the services are inconsistent with Articles 10, 11, and 12 of the 1952
Agreement, and if so, whether, and to what extent, the services should be modified to comply
with the requirements of Articles 10, 11, and 12. Both aeronautical authorities shall exert their
utmost efforts to reach an agreement within such reasonable time as the case might require.
7. Consultations described in subsection X A 4, above, may be held only after a six (6)
month period of actual operations, or such longer period as may be mutually agreed by the
aeronautical authorities of both Parties. With respect to inaugurations of services on new route
segments, the six (6) month period of actual operations shall begin after an initial three (3) month
start-up period.
8. In the event the aeronautical authorities of both Parties are unable, in the course of
consultations, to reach an agreement as to whether an airline's operations meet applicable
capacity or frequency requirements, the operations in question shall be permitted to continue
24
until an agreement is reached as a result of such consultations, or if the aeronautical authorities of
both Parties do not reach an agreement as a result of such consultations, until resolution of the
questions pursuant to Article 15, 16, or 18 of the 1952 Agreement.
9. Absent agreement of the Parties or resolution of the question pursuant to Articles 15,
16, or 18 of the 1952 Agreement, neither Party shall unilaterally limit a designated airline's
operation of agreed routes and frequencies.
10. These procedures shall apply to proposed changes, including inaugurations, of
services, notwithstanding the pendency of consultations or the other procedures under this
Section on any prior proposals, including proposals to commence or increase services on the
same route.
11. The continued operation of services pursuant to the procedures for reviewing
operations as set forth in this Section may not in any case be considered by one Party to be a
breach of agreement, absent agreement of the Parties.
B. PROCEDURES APPLICABLE TO PASSENGER SERVICES ON
FIFTH FREEDOM OPERATIONS TO AND FROM EUROPE/AFRICA
The procedures in this Section (Procedures Applicable to Passenger Services on Fifth
Freedom Operations to and from Europe/Africa) shall apply to all fifth freedom operations to and
from Europe/Africa of all combination airlines with respect to passenger services.
1. Airlines of each Party shall follow the procedures normally applied on a
nondiscriminatory basis under the laws and regulations of the other Party relating to the filings
by airlines of either Party reflecting changes in the capacity or frequency of services including
inaugurations of new services, on agreed routes.
2. All changes in capacity or frequency of services, including inaugurations, of fifth
freedom operations to and from Europe/Africa may be reviewed by the aeronautical authorities
of the other Party to consider whether the planned operations are in compliance with Articles 10,
11, or 12 of the 1952 Agreement. The operations in question may not commence if the reviewing
aeronautical authorities object to them, or have withheld any necessary approvals.
3. If the aeronautical authorities of either Party have concerns with respect to such
operations, they shall promptly notify the aeronautical authorities of the other Party of their
concerns and the bases therefor, and may request consultations under Article 14 of
the 1952 Agreement to discuss any reservations expressed by the aeronautical authorities of the
Party in the light of projections or data reflecting the probable results of such operations.
4. In consultations concerning passenger services on fifth freedom operations of
incumbent combination airlines to points in Europe/Africa, the aeronautical authorities shall first
consider whether the operations at issue are within the limits of the applicable formula in
subsection I A 2, above. If the aeronautical authorities reach agreement that the operations are
25
within the limits of the applicable formula, then they shall next consider whether the services are
consistent with the relevant provisions of the 1952 Agreement.
5. Consultations shall be held promptly following a request therefor, at a time mutually
agreed by the aeronautical authorities of both Parties. At such consultations the aeronautical
authorities of both Parties shall seek an agreement as to whether the services should be permitted
to be inaugurated or operated. Both aeronautical authorities shall exert their utmost efforts to
reach an agreement within such reasonable time as the case might require.
6. In the event the aeronautical authorities of the Parties are unable, in the course of
consultations, to reach an agreement as to whether an airline's operations meet applicable
requirements, the operations in question shall not be permitted until agreement is reached as a
result of such consultations, or, if the aeronautical authorities of both Parties do not reach an
agreement as a result of such consultations, until resolution of the questions pursuant to Articles
15, 16, or 18 of the 1952 Agreement.
C. TERMS APPLICABLE TO ALL OPERATIONS
1. Neither of the Parties shall be permitted unilaterally to require incumbent
combination airlines of the other Party to file traffic reports or data relative to fifth freedom
operations to and from Asia/Americas for the purpose of determining its compliance with
provisions relating to traffic composition, frequency, or capacity in this 1998 MOU or the prior
agreements.
2. Nothing in this 1998 MOU shall be construed to limit the rights of either Party to
enforce its domestic competition laws and other laws and regulations on such issues as safety,
security and environment against any airline operating services under this 1998 MOU or any of
the prior agreements following an appropriate proceeding, so long as such laws and regulations
do not discriminate on the basis of nationality or any other improper or inappropriate basis.
Part XI. RELATIONSHIP TO OTHER PROVISIONS AND AGREEMENTS
Nothing in this 1998 MOU shall be construed to impair any existing rights of a Party,
under the prior agreements, to reallocate frequencies, select new points or change points for
service, or substitute airlines.
RODNEY E. SLATER TAKAO FUJII
SECRETARY OF TRANSPORTATION MINISTER OF TRANSPORT
OF THE UNITED STATES OF AMERICA OF JAPAN
Washington, March 14, 1998
26
APPENDIX
WEEKLY FREQUENCIES BASED ON SCHEDULES
FOR THE 1997/1998 IATA WINTER SEASON
CITY-PAIRS ANA CO/CM/AM JAL NW UA
TKO-NYC 7 8 7 11
TYO-CHI 7 7 6
TYO-SFO 7 7 14
TYO-LAX 7 13 7 14
TYO-HNL 7 30 14 10
TYO-GUM/SPN 17 18 14
OSA-LAX 7 7 7
OSA-HNL 14 14 7
OSA-GUM/SPN 7 14 14 7
NGO-HNL 7 7 7
FUK-HNL 7 1
DEPARTMENT OF STATE
WASHINGTON
April 20, 1998
Excellency:
I have the honor to acknowledge the receipt of Your Excellency's Note of
today's date, which reads as follows:
"I have the honor to refer to the recent consultations on the Civil
Air Transport Agreement between Japan and the United States of America
signed at Tokyo, on August 11, 1952, as amended (hereinafter referred to
as the "1952 Agreement"). I have further the honor to propose, on behalf
of the Government of Japan, that the provisions contained in the
Memorandum of Understanding signed in Washington, on March 14,
1998, attached hereto, which were negotiated with a view to ensuring the
implementation of the 1952 Agreement in a manner appropriate to the
Japan-U.S. aviation relationship, shall be implemented and that, with
respect to routes, the Schedule to the Agreement be modified accordingly.
If the above proposal is acceptable to the Government of the
United States of America, I have the honor to propose that this Note with
its attachment and Your Excellency's Note in reply shall constitute an
His Excellency
Kunihiko Saito,
Ambassador of Japan.
2
agreement between the Government of Japan and the Government of the
United States of America which will enter into force on the date of Your
Excellency's reply."
I have the honor to inform Your Excellency that the Government of the
United States of America accepts the above proposal of the Government of Japan
and to confirm that Your Excellency's Note with its attachment and this reply
shall constitute an agreement between our two Governments, which will enter into
force on the date of this reply.
Accept, Excellency, the renewed assurances of my highest consideration.
For the Secretary of State:



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